Lots going on. In fact so much its hard to keep up with the latest plus have the time to digest it all. The most exciting is Gordon Brown (Labor party) stepping down as UK Prime Minister and David Cameron(Conservative party) stepping in. What great news! Now we have Conservatives in 3 European countries ie UK, Germany and France. Could this be a trend? I hope so. Lets keep our fingers crossed that come November the U.S. joins the trend...
Now onto Credit Default Swaps, Greece and the economy. I learned something very disturbing today. First, I'll define what CDS' are. They are bets made by investors (hedgefunds mostly) for or against loans and/or credit defaults by various companies. These bets are a great indicator on the financial stability of the credit market. Who will default? Who is stable?
So what did I learn that is so disturbing? Many of these CDS' are underwritten by AIG, the big insurance concern. AIG was bailed out by the US government. The US government is not in the best financial shape and on its way down in a big way. So what happens when its time to make pay outs for the CDS' and who makes the payouts? Why, the U.S. government and the taxpayer since we bailed out AIG last year. The U.S. is also buying Euro dollars. What the hell is going on? Why are we putting ourselves at such risk? Who ends up making money from all of this? Companies like Goldman Sachs and other Wall St. concerns at a cost to the American taxpayer...
I am a capitalist and believe in free enterprise and as little regulation as possible. But something is not right when the US government ie us, the American taxpayer, are footing the bill for risky behavior by private industry. It all boils down to the Feds being in bed with Wall St. I first realized this awhile back when reading "Street Fighters" about the downfall of Lehman Bros and Bear Stearns. Now its even more evident and blatant and no one seems to be called to the carpet for it.
Its okay for private industry to blow themselves up. But its NOT alright for the American taxpayer to foot the bill.
Add Greece, India, Spain, Portugal to the CDS mess which is world wide and things are even worse as the USA is also helping to foot the bill for their debt. But with what? Where will the money come from? We're already in a mess. How do we get out of it? Does anyone have an answer?
